Pakistan's Cement Industry: Increased Capacity but Decreased Sales
Pakistan's cement industry, despite its significant installed capacity of 83.179 million tons across 26 operational plants, faces a paradoxical situation with declining sales due to reduced domestic demand.
Pakistan's cement sector, rich in indigenous raw materials, has seen its actual sales consistently decline throughout the fiscal year 2022-23, primarily attributed to decreased domestic demand. The total cement sales for the year stood at 44.58 million tons, marking a 15.71 percent decline year-on-year. This trend continued into the early months of the fiscal year 2023-24, with total cement sales from July 2023 to January 2024 reaching 27.296 million tons, a nominal six percent growth compared to 25.770 million tons in the same period the previous year.
Lucky Cement has emerged as the country's largest cement producer, with an annual installed capacity of 14.955 million tons, followed closely by Bestway Cement with a capacity of 14.798 million tons. Other significant contributors include Fauji Cement, Maple Leaf Cement, and DG Khan Cement, among others.
Despite the substantial capacity expansions over the past decade, from 47 million tons in 2010 to the current 83 million tons, driven by optimistic demand projections, especially in export markets, the industry has faced reduced domestic demand. However, it has managed to achieve revenue growth primarily through price hikes in the domestic market.
The industry's focus has shifted towards boosting exports and exploring new markets due to sluggish domestic sales. Despite global challenges, Pakistani cement exports surged from 2.152 million tons in 2021-22 to 4.566 million tons in 2022-23, accounting for roughly ten percent of total sales. Major export destinations in 2022-23 included Sri Lanka, Afghanistan, Bangladesh, Madagascar, and others.
Pakistan's cement exports have historically been inconsistent, facing competition from cheaper sources like Iran, India, and China. Bangladesh, in particular, has revamped its cement industry, becoming self-sufficient and recently entering the export market.
To maintain competitiveness in international markets and regain momentum, the industry must enhance its global standing. Leading exporter Lucky Cement, with significant advantages in both bagged and bulk exports, and other companies like Power Cement and DG Khan Cement are exploring new markets, including the UK, the USA, Mexico, France, and Germany.
Source: The News International
